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Eli Lilly, Amylin end diabetes partnership

by Lou Whiteman | Published November 8, 2011 at 11:07 AM

Amylin Pharmaceuticals Inc. said Tuesday, Nov. 8, it will pay Eli Lilly and Co. at least $250 million and as much as $1.2 billion in future years to end a diabetes partnership that has been marred by litigation between the two companies.

The two companies in 2005 launched Byetta, a drug that stimulates insulin release when glucose levels become too high and had been working on securing regulatory approval for Bydureon, a longer-acting version. Both treatments are based on a chemical compound called exenatide. But Indianapolis-based Lilly in recent years has turned its focus toward a separate diabetes partnership with Germany's Boehringer Ingelheim GmbH, spurring litigation between Amylin and Lilly.

Amylin had attempted to halt Lilly from using its Byetta sales force to market drugs that emerged from the Boehringer Ingelheim partnership.

Terms of the separation agreement call for San Diego-based Amylin to buy Lilly's partnership interest for $250 million and to make revenue-sharing payments to Lilly equal to 15% of global net sales of the diabetes drugs until Amylin has made aggregate payments of $1.2 billion plus interest. If Bydureon has not received U.S. regulatory approval before June 30, 2014, Amylin will pay Lilly 8% of global sales.

As stipulated in the agreement, Lilly will transition U.S. operations to Amylin by Nov. 30 and will transfer global commercialization of both Byetta and Bydureon on a market-by-market basis through 2013.

Amylin in a statement said that the deal would ensure patients will continue to receive their drugs, while giving the company greater flexibility to continue to commercialize the exenatide compound.

"We anticipate working with one or more partners outside the U.S. in order to maximize the global potential of this innovative molecule and achieve greater operational flexibility and efficiency," Amylin CEO Daniel M. Bradbury said in a statement. "This clarity of focus will provide us with an enhanced opportunity to increase shareholder value."

Analysts have said that with obesity and diabetes rates increasing globally, companies focused on those markets including Amylin and Human Genome Sciences could be attractive acquisition targets.

Skadden, Arps, Slate, Meagher & Flom LLP's Nancy Lieberman, Ann Beth Stebbins, Jose Esteves and Sarah Ward advised Amylin.

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